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TMI Blog1952 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... re. But we have to construe it as we find it and when we turn to that clause it deals with a deduction under Section 10(2); and the deduction in case of a person who is doing business, and whose accounts are not kept on cash basis, is "such sum in respect of bad and doubtful debts...as the Income-tax Officer may estimate to be irrecoverable, but not exceeding the amount actually written off as irrecoverable in the books of the assessee." It is difficult to understand what distinction is sought to be made between bad and doubtful debts; but the difficulty and ambiguity is cleared by the fact that whether the debt is bad or doubtful it must in the estimate of the Income-tax Officer be irrecoverable. Therefore, in the case of persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt or the loan which has become irrecoverable; but it is not sufficient. The assessee must satisfy the Income-tax Officer that in fact the debt or the loan became irrecoverable in the year of account. Now the Tribunal has pointed out in the statement of the case that it felt some doubt and required guidance from us and they have referred to a Privy Council case, viz., Income-tax Commissioner v. Chitnavis [1932] 59 I.A. 290; 6 I.T.C. 453. Now that case itself furnishes sufficient guidance to the Tribunal with regard to the matter in which they felt doubt, because when we turn to that case at page 297 their Lordships point out as follows:- "It thus follows that a debt, which had in fact become a bad debt before the commencement of a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome an irrecoverable debt in that year. Now, a loan becomes irrecoverable or a debt becomes a bad debt when the creditor has no reasonable expectations of recovering it from the debtor; or, as it has been put in some cases, when there is no ray of hope at all on which the creditor can rely for recovering the amount from his debtor that it can be said that a debt has has become bad or a loan has become irrecoverable. But, if the correct principle is applied by the department then it must be a question of fact as to whether a debt has become a bad debt or not. Now unfortunately in this case the Tribunal has expressed an opinion that the loan had become "practically irrecoverable" in S.Y. 1997 and in the question which has been submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be entitled to a deduction under Section 10(2)(xi). If, on the other hand, they take a view that the loan became irrecoverable only in S.Y. 2000 and could not be said to be irrecoverable prior to that then the assessee would be entitled to a deduction under Section 10(2)(xi). With regard to the first question submitted to us, viz., "whether the monetary transaction of the assessee with Niranjan Prakash was a loan made by the assessee to Niranjan Prakash in the course of his money-lending business," the Tribunal has found as a fact that the assessee was a money-lender and what he was doing was advancing moneys on the security of the film. Here again the finding of the Tribunal is not very clearly expressed. They say: &q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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